TyroCity: Business Studies XI Notes

Functions of an Office

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Functions of an office

Primary or basic functions
Auxiliary or administrative management functions

1. Primary or basic functions
An office basically performs those functions that are related to information management. It helps in receiving, recording, arranging, analyzing and transmitting information.

Receiving and collecting information
Receiving and collecting different types of information from the different types of sources is the primary function of an office. The information is received from two sources. They are internal and external. Letters, invoices, circulars, notices, memos are the internal sources and supplier, customers, government, banks are the external sources
Processing and arranging information
It is the most significant function of an office. The information collected and recorded cannot be readily used for the decision-making and other purposes in the organization. Therefore, it must be processes and arranged. Processing information involves preparing notes, sorting, editing t. all information are to be arranged in a systematic way.
Supplying information
After arranging and analyzing information it is ready to supply in the management. It provides necessary information to its member whenever it I required. This information helps in decision-making process.
Retention of records
Retention is defined as the preservation of records for future reference. It involves collection, preservation, classification and protection of records for future reference. It is maintained in files, computers etc. Every record has a life span. It is protected according to its importance. Retention of record depends upon nature of organization. The efficiency of office depends upon the way records are retained

2. Auxiliary or administrative management function

Management process
To make any business successful there must be good management. Office helps in effective management. It includes planning, organizing, staffing, directing and controlling. It helps in smooth functioning of the organization.
Public relations
There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action.
Development of office system and procedure
Every office develops a definite office system and a fixed routine. It helps in smooth flow of office work. The system is also known as procedure of office work.
Safe guarding the assets
All assets, movable and immovable, documents and office records must be guarded and protected. They can protest these assets through insurance policies, locker etc.
Form designing and control
An office designs, develops and prepares many types of form needed for office management. It helps to get maximum benefits. These office forms are important tools for collection and storage of information.
Purchasing stationery and supplies
Office stationery and supplies are essential for doing work. It helps in increasing the efficiency and improving quality of works done. Office should pay attention in purchasing right type of stationery and supplies
Purchasing office furniture and machine
Office requires various types of office furniture and machine for efficient performance. The quantity, quality, consistency and completeness of work basically depend upon the ability and quality if assets like office furniture and machine.
Personnel function
Office is also related to recruiting, training, placing, promoting the employees. Employees help in the success of the organization.

Difference between private company and public company

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Bases of difference	Private company	Public company
Number of members	It needs at least 1 member for its formation. The maximum number can be 50.	It needs at least 7 members for its formation. The maximum number is not limited.
Invitation for capital	It cannot invite the public to buy its shares	It is free to invite the public to buy its shares
Commencement of business	It can commence the business immediately after the incorporation	It can commence the business after receiving the certificate of commencement of business.
Issue of prospectus	It does not need to issue prospectus	It must issue prospectus
Statutory meeting	It does not need to hold statutory meeting and file statutory report.	It must hold statutory meeting and file statutory report
Transfer of shares	The transferability of share is not allowed and hence its ownership cannot be transferred	The transferability of share is allowed and hence its ownership can be transferred
Use of word	It must use the word Pvt. Ltd. at the end of its name.	It must use the word Ltd. at the end of its name

Role of cooperative organization in developing countries

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Following are the role of cooperatives in developing countries:

Works for the economic progress of the nation
Uplifts the poor people.
Develop the weaker section of the country
Bring balance between economic and social development of the country
Mobilization of resources in rural areas
Employment of the people in agricultural sector
Provide better qualities of seeds, fertilizers, pesticides, insecticides to the farmers
Help to get agricultural loan.
Helps to establish business in low capital
Enhance the economic activities like banking, shares, investment and so on
Encouragement in saving
Farmers, employee, and small retailers who are often neglected for loan are provided credit facilities.
Provides loan to poor farmers at low interest rate.
Elimination of poverty
Increase the living standard of people

Merits and demerits of joint stock company

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Merits of joint stock company

Large capital:
A company can collect huge capital for the business through shares and debentures, public deposits, loans etc. Due to huge capital the company can conduct business on a large scale.

Limited liability:
Usually the liability of members of a company is limited to the extent of uncalled or unpaid shares held by them. Their personal property cannot be seized to meet the company’s liability beyond the above mentioned liability.

Continuity and stability:
Death, insolvency or insanity of any member of the company will not affect its life and existence. Men may come, and they may go but a company remains forever. It can be wound up under the provision of the act.

Professional management:
The Company appoints experienced, competent and expert to manage the business. Their services lead to managerial and administrative efficiency and accuracy.

Economies of scale:
A company operates on a high scale and so it enjoys economies in production, distribution, management and financing.

Bargaining power:
Compared to other forms of organization, a joint stock company is a strong power in buying as well as in selling of goods because of its large scale production.

Legal status:
Since the company is created by law, it has separate legal existence compared to its members. Therefore, the members cannot be personally held responsible for the acts of company and company cannot be held liable for the acts of the members.

Large membership:
The Company is owned by many members- maximum of 50 in the case of private limited company and unlimited number of member in the case of public limited company.

Transferability of shares:
Shares of Joint Stock Company, especially public companies, are freely transferable. A member who wants to sell his shares can easily do so in the stock market. This encourages the public and other to invest in shares.

Employment:
Joint Stock Company provides employment to many people directly and indirectly. This leads to higher national income for the country and higher living standard of living for the people.

Government revenue:
Joint Stock Companies provide revenue to the government in the form of taxes charged directly and indirectly.

Research and development:
Joint Stock Companies undertakes R&D continuously thus bringing about new and improved products which benefits people.

Economic development:
Because of Joint Stock Companies there is all round development of trade, commerce and industry. The society in general gains the benefit of the industrial development. Large capital, government revenue, economic development etc. are the advantages of Joint Stock Companies.

Demerits of Joint Stock Company

Difficult formation:
Formation of Joint Stock Company is an expensive and time-consuming process as a number of legal formalities have to be undertaken in order to register the company.

Lacks flexibility:
The working of a Joint Stock Company is less flexible s compared to other organizations. For very small thing they either have to follow a detailed procedure or obtain sanctions from various authorities. This results in lack of flexibility.

No business secrecy:
This form of organization lacks business secrecy because it is compulsory for the company to publish accounts and other records

Excessive government regulation:
The Company is a subject to excessive government control. It has to follow the numerous provision of the companies act. This makes working difficult.

Delay in decision:
The Joint Stock Company is completely not free to take all decisions and to implement the decisions. Due to excessive government control and democratic set up all decisions are taken in meetings and some decisions require shareholder’s approval. All this leads to delay in decisions.

Lack of contact with customer:
A company can’t be in a position to maintain intimate contacts with customers. It cannot be able enter to the requirements of each and every customer. Then there is no close personal touch which decreases the competitive strength of the business due to large scale operation.

Lack of contact with employees:
The top management may not have contact with their employees. This may cause friction and disputes amongst the management and the employees with may affect the worker’s and employee’s morale.

Conflict of interest:
Many persons are the owners of Joint Stock Company. There can be misunderstanding and jealousy amongst them and these cause problems in operation of business and profit making

Not suitable for all type of business:
This type of organization is not suitable for business where personalized services are required.

Exploitation of shareholders:
Sometimes the BOD may misappropriate the fund and mislead the shareholders by window dress report. The directors may even manipulate the trading on the stock exchange. Thus, shareholders can be exploited by corrupt directors.

Types of cooperative organization

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Producer co-operatives: Some co-operatives process and market their members’ products and services directly while others may also sell the input necessary to their members’ economic activities. Examples: Agriculture co-operatives, pooling of equipment, advisory services, etc.

2. Multi-stakeholder co-operatives: The membership of these co-operatives is made of different categories of members who share a common interest in the organization. Examples: home care services, health services, community services, etc.

3. Worker co-operatives: The purpose of these co-operatives is to provide their members with work by operating an enterprise. The co-operatives are owned by their employee members. Examples: forestry, leisure, production and manufacturing, tourism, communications and marketing, etc.

4. Worker-Shareholder co-operatives: These are incorporated co-operatives that hold partial ownership of the business in which the co-op’s members are employed. Because of its share capital, the co-operative may participate in the management of the business and the workers may influence work organization. Examples: production and manufacturing, technology, etc.

5. Consumer co-operatives: They provide their members with goods and services for their personal use. Examples: Food, credit unions, housing, insurance co-operatives, etc.

Component of Business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Scope of business
Business covers wide area and all economic activities. It also includes all types of industry and commerce. Industries are related to the activities of production of goods and services and commerce is related to distribution of goods and services from producers (industries) and customers.

Types of industries

1. Genetic industries:
Genetic industries are also called heredity industries that involve in production of goods from plants and animals to earn profit. Those industries which produce medicines from herbs, perfume from flowers, milk and meat form animals are called genetic industries

2. Extraction industries:
Industries that are involved in extracting the resources from the sources of nature are called extraction industries. It supplies the raw material to other industries. These types of industries are generally based in mining, fishing etc.

3. Construction industries:
Those types of industries which are related to construction of different infrastructures are called construction industries. They basically construct road, bridges, houses and so on . It helps in development of country

4. Manufacturing industry:
It is related to produce finished goods. It processes raw materials into finished goods. There are mainly 4 types of manufacturing industry they are:

Analytical industry:
It is an industry which produces goods by analyzing raw materials in scientific way. In this industry various goods ate purchased by single material. For example dairy product (milk, ghee, butter, ice cream from milk)
Processing industry:
The industry which is involved for production of goods and services by using different steps or stage is called processing industry. For example for processing cotton into thread the processes of spinning, weaving, dying, bleaching is used.
Synthetic industry:
The industry which is involved for using various raw materials to produce a single good is called synthetic industry. For example to produce cement limestone, red soil, chemicals etc are used.
Assembling industry:
The industry which is involved for production of goods by combining different parts which are already manufactures by different industries is called assembling industry. For example TV, computer, mobile, watch manufacturing industries.

Commerce:
It is related with buying, selling and exchanging of goods and services. It is related to economic activities to earn profit. The role of bridge between manufacturer and customer is played by commerce

Types of commerce

Trade:
Trade is related to buying and selling goods and services for earning profit. It supplies quality goods with reasonable price. Those activities which are related to buying, selling and distributing goods in market is known as trade

Types of trade

1. Home trade:
Home trade means national, domestic or internal trade i.e. Buying and selling within a nation. In home trade both buyer and seller are from the same nation. In home trade task is simple than foreign trade. It is classified into two types they are.

Wholesale trade:
When trader buy goods in bulk amount and resell to retail in small volume is called whole sale trade. In this trade goods are bought from manufacturer and are sold to retail. It acts as a middleman between manufacturer and retailer. It deals with special product
Retail trade:
When trader buy goods in bulk amount and resell to customer in small volume is called retail trade. In this trade goods are bought from wholesaler and are sold to customer. It acts as a middleman between wholesaler and customer. It deals with various types of product.

2. Foreign trade:
Foreign trade means international, global, external trade i.e. Buying and selling is between two or more nation. In foreign trade buyer and seller are from different nation. In foreign trade task is difficult than home trade. It is classified into three types they are.

Import:
A good or service brought into one country from another is called import. Along with exports, imports form the backbone of international trade. The higher the value of imports entering a country, compared to the value of exports, the more negative that country’s balance of trade becomes. Buying goods from India, china is called import.
Export:
A good or service sold to another country from one is called export. Along with imports, exports form the backbone of international trade. The higher the value of exports exiting a country, compared to the value of imports, the more positive that country’s balance of trade becomes. Exporting herbs, garments to Germany, India is the example of export
Entry port:
The trade in which a country purchases the goods from one country and sells it to another country is called entry port trade. The goods bought from a country is not used for self benefit but is rather exported to another country. For example India buys herbs from Nepal and sells it to china.

Auxiliaries of trade:
It supports or assists the trade activities. It helps to run business smoothly. It helps for transfer goods from production area to consumption area. It creates time and place utility.

1. Transportation:
It transfers goods from one place to another. There are many means of transportation that can assist business and trade activities. They are air travel. Bus route, sea route, rope route etc. It delivers right product and right time in right place. It creates time utility

2. Warehouse:
It is one of the auxiliary of trade. It helps to protect and store goods until customers uses them. It provides the goods then demand is created. It also helps to provide unseasonal goods.

3. Insurance:
It acts as nutrition to trading activities. It helps to reduce risk and uncertainties. It is a contract between organization and their future. The system that takes the responsibility of compensation of certain risk is called insurance system.

4. Banking:
Banks are the financial institution that supports for traders. It provides loan, investment, credits facilities to the trading companies. It helps for expansion and flexibility of trade.

5. Advertising:
It is a supporter to trade. It provides information to customer about goods and services. Its aim is for creation of demand. It also acts as a promotional tool.

Dissolution of partnership firm in Nepal

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Existing partners can dissolve the firm by another agreement
Dissolution by notice, any partner can dissolve the firm by giving notice to all the partners
If any partner is unable to take responsibility of partnership deed.
If partner do not pay the amount payable to the firm
If shares are transferred without consent of other partners
If right of partners is taken over by the court of compensation
Liable for negligence
Death of partner
Dissolved by concerned department
Commits illegal work or violate the rules of the firm
If not renewed in given time.

Differentiate between sole trading and partnership

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Sole trading concern	Partnership firm
1. Low capital	1.high capital
2. One man management	2. two or more partners
3.quick and prompt decisions	3. Delay in decisions
4. business secrets can be maintained	4. difficulty in maintaining business secrets
5. risk and losses are to be born by a single person	5. there is reduction of risk and losses because they are shared with proportion of capitals by partners
6.no chances of conflict	6. Higher chances of conflict
7. lack of managerial ability	7. harmonization of managerial ability
8.chances of wrong decisions	8. Specialization in decision-making

Concept of multinational companies

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Multinational companies are those companies whose management, ownership and control are spread in more than one country. It does business in two or more countries. It is a large industrial organization. They are established in one country as parent country and in other countries as subsidiaries or as host countries. They produce and distribute goods and services in all these countries where they operate. The main aim of these companies is to operate business in most of the part of the world. Popular multinational companies of the world are IBM Company (USA), Sony Company. Wai wai, nestle company, coca cola company.

Characteristics of Sole Trading Concern

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Some characteristics of sole trading concern:

1. Single ownership:
A sole proprietorship is wholly owned by one individual. The individual supplies the total capital from which his own wealth or from borrowed funds.

2. One man control:
The proprietor alone takes all the decisions pertaining to the business. He is not required to consult anybody. Ownership and management are vested in a person.

3. No legal entity:
A sole proprietorship has no legal entity separate from its owner. The law makes no distinction between the proprietor and the business. The assets and liabilities of the business and its proprietor are not different.

4. Unlimited liability:
Proprietor is liable for all the debts of the business. In case the assets are insufficient to meet the debts, the personal property of the proprietor can be attached.

5. No profit sharing:
The proprietor is all alone entitled for all the profits and the losses of the business. He bears the complete risk and there is nobody to share the risks, workload or any profit or losses.

6. Small size:
The scale of operation carried out by sole proprietor is generally small.

Features of cooperative organization

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Features of cooperative organizations are as detailed below:

1. Voluntary association and open membership
It is voluntary association in which membership is open for all people with common interest. People can come together to satisfy the needs with common effort. In Nepal at least 25 members are required for establishment of cooperative organization.

2. Equal voting right
It is based on democratic principle. It is based on equality of status of all members. Decisions and other bills are passed on the basis of majority votes.

3. Democratic management
Management is always in democratic lines. All member of organization elect its managing committee. One man can give only one vote. Managing committee will then work for common benefit of all members.

4. Service motive
Its objective is to provide service to member. It’s not profit motive. Its aim is not to earn maximum profit as in all form of organization. Even though it can earn profit by extending their services to non members but they collectively work for service.

5. Legal existence
In Nepal, these types of organizations are established under cooperative act. There must be at least 25 members and they all must be guided through common objective

6. Cash transactions
In this type of organization transactions are done only through cash. There are no credit transactions. It eliminates bad debt too.

7. Disposal of surplus
It is service motive. Even though it can make surplus, the surplus amount is used for extending the surplus facility.

8. Education
The success of organization depends upon the education of its members. They should be constantly educated with objectives.

9. Liability
Liability of member is limited. It should use the word “ltd” after its name.

10. Government control
The organization must follow the rules and regulations of the government.

National Co-operative Development Board : Formations and Functions

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

National cooperative development board (NCDB)

It was established an enacted in kartik 21, 2049. It has been established for economical and social development of weaker section of the society according to the cooperative principles under the co-operative development board act, 2049. It is established under national cooperative development act, 2049. It is autonomous and corporate boy with perpetual existence. It has its own common seal. Board can purchase, sale or manage property. It is managed by an executive committee under the chairperson of the minister of agriculture and corporate.

Features

It is established under national cooperative development act, 2049.
It is autonomous and corporate boy with perpetual existence.
It has its own common seal.
Board can purchase, sale or manage property.
It is managed by an executive committee under the chairperson of the minister of agriculture and corporate.

Formation of NCDB

NCDB was established on kartik 21, 2049. Its main aim is to support economical and social development of weaker section of the society by formulating plan, policies and programs etc. The board is managed by an executive committee of 25 members. It consists of following member

Minister of agriculture → chairman
Person appointed by the mister of agriculture → joint chairman
Chairman, national cooperative → member.
Governor of Nepal Rastra Bank → member
Secretary ministry of finance → member
Secretary ministry of supply → member
Secretary ministry of industry → member
Secretary ministry of agriculture → member
Secretary ministry of local development → member
Representative from national planning commission → member
Registrar of cooperative department → member
Any two chairmen elected among chairman of central cooperative association→ members
Any 5 person nominated by government from among cooperative (1 from each development region) → members
One from female cooperative worker → member
Any two expert → members
General Manager of agricultural development bank → member
Person nominated by Nepal’s government → member secretary

Functions of NCDB:

To formulate plan and policies
Promotion for development of cooperative societies
Provide cooperation to government for policy formation
To prepare and implement the development plans and policies
To undertake research studies for the development of cooperatives
To invest in cooperative society
To provide necessary security if cooperative society demands for issuing debentures or obtaining loan from the bank and financial institution
To provide technical cooperative for the promotion and protection of cooperative society
To make agreement for joint investment with local and foreign investor